Avocet Mining Share Discussion Threads

[kojak78] 06/9/2005 14:56

Saucepan,

why is platinum more expensive than gold? Because it's scarcer.. that's what I thought. In reality both metals occur equally numerous. Platinum as just a touch, a touch, scarcer than gold, the ratio is 1:1

I believe more and more the only reason why gold trades at 445 and platinum at 910 is because we have a free market only in one of the metals.

A few prices platinum vs. gold, gold in % of platinum price:
1960s ca. 100 ca. 35, 35%
1977 150 140, 93%
1980 1050 850, 81%
1985 250 290, 116%
1999 350 250, 71%
2001 400 255, 64%
2005 910 445, 49%

Platinum performance since 1999: 160%
Gold performance since 1999: 78%

Assuming an 80% average for gold it should trade near 730.

Silver is interesting, too. IMHO silver isn't undervalued by much, it's natural occurence is 15:1 compared with gold. The problem is silver isn't a monetary metal anymore. What is a monetary metal? A metal that has large overground supplies compared to production. Clearly not the case with silver. Will gold lose the monetary function, too?
No. Some people want precious metals for diversification, the PM market won't disappear totally, currently the PM market is at the lows with very low demand, only place for one metal. Gold consumes less space and weight than silver so it's the obvious choice. Some kind of alternative currency. IMHO silver won't perform any better than gold longer term. Short term, yes, there's more speculation in silver. In boom cycles silver tends to be stronger than gold as it is a commodity, in busts it will underperform gold.

Eventually the world will again adopt precious metals as currency. Then and only then silver will regain its status as a monetary metal and outperform gold significantly and in the long term.

When will that be? When the social state breaks down. Fiat money and social states both emerged in the 30s. Many of the emerging markets don't know social spending, that's why they will adopt precious metals as currencies. The west won't do that as no one wants to give up welfare programs, state pensions etc.

[saucepan] 06/9/2005 09:46

An interesting and informative take, Kojak (as always). Copper is not for me either - but I admire and am a little envious of those who were savvy enough to anticipate and benefit from the great run it has had.

Let's indeed hope it is the turn of gold. On long historical timescales it seems so obvious that there is some catching up to do. The oil/gold ratio patterns you quote help to confirm this from another angle.

In summary, downside risk for gold seems low, and upside potential very signficant. So, we have a benign to very promising environment for AVM to be operating within.

As you have pointed out more eruditely than anyone, the fundamental case for AVM, nowithstanding the wider environment, appears almost to beggar belief.

All in all, AVM looks a tremendous investment over, say, a five-year timescale. If anyone seriously thinks there is a better one I hope they will say. Maybe my portfolio could do with a little more diversification ;-)

[kojak78] 06/9/2005 09:18

I would never prefer copper to gold. In the last years we had a US$ bear / commodities bull market. I don't know if that will continue.

IMHO one thing is sure: deflation. Prices are too high everywhere. Housing, labour, cars, just everything. Of course we won't get nominal deflation but real deflation with rising nominal deflation.
All states are deeply in debt. How will they pay that? Tax rates are very low compared to decades ago, but total taxes as a percentage of GDP are much higher. We have competition in the tax area: if one country decides to rise taxes the rich people will flee into another country. They can't rise taxes so they'll have to get their money by other means.. inflation. Even the rich people living let's say in the Bahamas or Switzerland can't avoid paying, as long as they are in US$ or Euro or Yen.

People assume monetary unions are a good thing. They aren't. A "monetary union" is nothing but a monopol on currency. In the past you could go into the German Mark, French Franc etc. when inflation loomed in one currency, you had flexibility. Now that's not possible anymore. We have 3 big currencies left and I guess sooner or later they will coordinate their actions so that there is no place left to hide. Inflation here we come.

Germany has perhaps 1 year left, then they'll have 60 bn. deficit, no state owned companies etc. left, all sold.
If inflation is still controlled deficits on most of the states will run above 6% meaning the end of the European monetary union.

Well, it's inflation in nominal terms. In real terms asset prices will rise much slower than living costs, meaning real deflation. I don't know where commodity prices are headed. But at least consumption in the west will break down.

Well, gold consumption won't break down as gold isn't consumed, it will do very well in such a scenario. Recently the gold / oil ratio was at 6.2, never was so low before. The ratio was between 44 and 8 in the past. 44 was in 1974. That year most gold mining stocks made their highs for the 70s. Today we have the opposite situation. The ratio won't break todays lows for 50 or 100 years. 6.2 is as extreme es 44 was in 1974, now 31 years in the past (and won't be surpassed for many many more years). The gold/oil price ratio is nothing more than a proxy for the gold mining profit margin. Gold stocks are the place to be, not housing, stocks, bonds, oil or commodities.

[saucepan] 05/9/2005 20:36

Ashley: what is your current take on AVM? I know you have been an enthusiast in the past. But, if I remember correctly from another thread, I gather that you are more enthusiastic about copper than gold presently. So, perhaps you are no longer so bullish on this individual stock?

[budevenwiser] 05/9/2005 15:14

been like that since thursday morning , evo either holding them back or have a seller could be a good sign if they come off the offer

[mr ashley james] 05/9/2005 14:12

Budenveiser,

Only EVO Left on Offer 86.00p, loads of mms on 84.00p bid.

[budevenwiser] 04/9/2005 23:23

Following our decision in September 2003 to build a new mine in Indonesia,
construction was completed in September 2004 and gold production commenced ahead
of schedule in October 2004. The North Lanut gold mine is the first foreign
owned gold mine of any significance in Indonesia to commence production in over
six years. The Indonesian government has been keen to attract further foreign
investment in the country. However, recent proposed amendments to the mining
laws as well as the Indonesian's government handling of the much publicised
Newmont Mining Corporation Buyat Bay case, have shown that there is some way to
go before foreign investors return in their droves to Indonesia. With an
established base in the country, this should be seen as an advantage and
opportunity for the Company.

[phillis] 04/9/2005 19:43

Newmont seem to be in trouble in Indonesia accused of poisoning the locals with cyanide

[budevenwiser] 04/9/2005 15:27

Exploration is key to the company's future at all three of its projects and here Peter Flindell, who joined the company as chief geologist in 2002, is playing a blinder.. During his career with Newmont, part of which was spent as exploration manager of the western Pacific region, he played a leading role in the exploration and development of the two million ounce Mesel gold mine in North Sulawesi, Indonesia, and was responsible for the discovery of Avocet's North Lanut project which is about 40 km from Mesel. He was also involved in the early assessment and evaluation of Newmont's US$2 billion Batu Hijau copper-gold mine in Sumbawa, Indonesia. He likes the region and has identified six targets for new tenement applications in Malaysia. Good results are also reported from the Buffalo Reef prospect about 40 kms from Penjom and could become a satellite producer.

In Indonesia also a number of drill targets are being evaluated in the region around North Lanut and elsewhere in Indonesia great hopes are expressed that the Idenburg property may prove to host a multi-million ounce , high grade reserve amenable to conventional carbon-in-leach recovery treatment. Avocet is going to spend US$2.5 million over 2 years to earn a 51 per cent interest in the company which owns Idenburg and this brings with it exploration as well as mining rights over 420 sq miles of Papua province on the island of New Guinea where the huge Porgera and Grasberg mines are situated. Exploration permits have also been obtained over an area in South Sulawesi which has geology similar to that at Penjom.



just a reminder of a couple of paragraphs from the last minesite article ,
that peter flindell looks like he could be one of the best additions to avm in the last few years with all his experience and know how

dooby dave
i know its not avm buying anymore land in indonesia because that was one of the questions i asked him when we were talking about the rupiah and dollar
if they intended to take advantage of the weak rupiah to buy up more land
he said , none what so ever they already had more than enough land to be going on with

[doobydave] 03/9/2005 12:35

Bud,
My thanks too for a very excouraging from-the-horses mouth update.

There is one pretty obvious question, though. Why do the Directors - plural at that - need to go to all the way Jakarta to release news, even if it's good? There surely has to be more to this. Suggestions welcomed.
DD

[saucepan] 03/9/2005 10:53

Budevenwiser: thanks enormously for post 829. It is an example of bulletin boards at their best - helping to give the private investor insights that would otherwise be the privilege of only those with city connections.

Thanks, too, DoobyDave, for digging out the relevant reference on the AVM website.

There is a lot to digest, but it all seems very favourable. I had not previously picked up on the change in valuation rupiah/dollar - a very interesting "nugget" of information in itself (excuse the expression).

I agree, the trip to Jakarta, to release drilling results, has the potential to be enormously significant. Favourable results cannot necessarily be assumed. But, knowing the record of the company as we do, and taking into account the fact that this information release appears to have been set up in the way it has (to paraphrase you - why travel to Jakarta to release "duff results"?), I know which way I am prepared to gamble.

I am very heavily invested in AVM already, mainly in shares tucked away for the long-term, but also through 9-month spreadbets, which will be rolled over. With this additional information, I plan to squeeze even more exposure if I can next week.

There is always downside risk with any share. All things considered, however, weighed against potential rewards, no share that I have researched offers better prospects with a degree of safety.

As I pointed out here a few days earlier, the chart also looks quite tasty, if you believe in the signs of such tea leaves.

All in IMHO. No advice intended.

[kojak78] 02/9/2005 13:27

Different sources over here in Germany. Most are bought from Dresdner Bank. Even eBay is ok sometimes.

I prefer eBay for the small coins like 1/10 K

Coin dealers offer good deals sometimes! I never paid more than a few percent above gold price.

[budevenwiser] 02/9/2005 13:12

kojak
think you are leading us up the garden path
i expect you have held your Ks and other coins for quite a while and are well in profit on them
but if the gold price does'nt go up in sterling from here i wont make any money
where do you buy your coins from if you dont mind me asking
cheers

[kojak78] 02/9/2005 09:45

Regarding the question of bullion gold coins vs. ingots i would buy bullion coins every time. Why? Ingots can be counterfeited. Coins are very safe. Just weigh them and make sure the dimensions are right. Bismuth can be used for ingots, but not so for coins as it will show in the imprint. Then gold coins are available in smaller units like Swiss Vreneli, Sovereigns and the like. That means you will have much less trouble to get rid of your coins than of ingots in a gold mania.

Another test for gold coins is the sound of the coin when you let them drop on the table.

I own most of my gold holdings in Krugerrands, I guess they won't go up in value at all vs. the gold price.

[jk8] 02/9/2005 09:11

...you should know that the share price only goes up when the POG goes down!!!!!!!

[kickstart] 02/9/2005 09:08

Very surprised we are not on the move today given the Gold price.

[kickstart] 02/9/2005 01:45

I am a numismatist and collect 5 pound pieces amoungst other gold coins ( eg. Guineas). But the very cheapest way is probably to buy gold ingots from companies like Baird. Very small premium and you can just buy lumps of gold i.e. 1oz, 5oz, 16oz etc etc. I am lucky I have a proper safe to store my coins.

[doobydave] 02/9/2005 00:20

Idenburg, Indonesia

Avocet is earning a 51% interest in the Idenburg Contract of Work in eastern Indonesia through the expenditure of US$ 2,500,000 as announced 14 December 2004. The property lies in a low mountain range some 120 kilometres to the south of the provincial capital of Jayapura and north of the main Jayawijaya mountain range.

The property encompasses the western half of the Idenburg Inlier, which is a 60 x 30 km block of metamorphic rocks overthrust by ultramafic rocks and intruded by calc-alkaline diorite. Limited exploration has identified several high-grade mineral occurrences. Rock chip samples exceeding 100 g/t Au and channel samples of 3m @ 73 g/t Au and 10m @ 10.7 g/t Au are common.

The focus is on Kali Sua Sinta where there are several zones of high-grade mineralisation within a 400 metres strike length and 500 metres width. This is located within a shear zone that extends for at least five kilometres.

The Company is at the early stages of discovering a significant orogenic gold district.".

------------------------------------------------------------------------------------------------------------------------------
That last sentence really is quite eye-catching, considering how conservative the company normally is. Anyway, thanks for the heads-up, budenweiser.
DD

[budevenwiser] 01/9/2005 23:25

kojak
thats all the coins are bullion coins for hiding away and adding to
the premium i was refering to was as you probably know ( much more experienced than i ) 6% charged above intrinsic gold value by gold coin dealers .
i got a price from a well known firm for 100 choice this afternoon and to buy from the would have cost over 470 more , anyway thanks for your help


getting back to my chat with j henry today a couple of things i really liked were north lanut 5000 ounces last month and hoping for more next and around $200 per ounce produced
and also avm management trip to jakarta to release details of idenburg drill results , cant see them going there unless they have something big to crow about , think i saw on avm website map two close multi million resources now that would be nice

[kojak78] 01/9/2005 21:24

@budevenwiser

Sovereigns are just bullion coins, nothing more. IMHO the best value in such coins is the Swiss Vreneli. Except the 1935 and 1947 ones..

Then there are the Chinese Pandas. Not the ordinary Pandas, but the Munich coins show Pandas. Sometimes they coined only between 2500 and 5000 pieces. Not bad if you consider they sell most of the time at their gold value.

The basic thing is to buy the bullion coins. Gold appreciates and so do the coins. BUT the coind have nearly no premiums. That will change. They will have 20 to 30% premium again when the public rushes into the gold sector. The better coins have the potential numismatic value as icing on the cake. A few coins will become super deals. I mean some coins that can be bought today at their gold value will sell at US$30000/oz or more in 2005 US$. Imagine: it's 2055 and some very rich Chinese coin collector wants to have all Chinese Pandas ever coined. He just needs one of those 2500 or so 1993 Munich Coin Show Pandas.

That's exactly what happened in the US numismatic coin sector.

I don't bet on it. But it's like a lottery where you just can't lose.

Another way (which I don't like..) to play the numismatic market is to buy recognized numismatic coins. Disadvantage: huge premiums above gold price and need to preserve the coin in ideal condition. Advantage: premiums are most of the time as a percentage of the underlying gold value. Increasing gold prices mean increasing numismatic values.

[jeddah jo] 01/9/2005 17:14

No, small volume shares like Avocet are rife with manipulation.

[kojak78] 01/9/2005 16:58

Disturbing.

Gold Stocks go up 3.5% while Avocet drops 1%. Today we should have seen 4 to 7% rise.

Is there really a free market in Avocet shares??

[budevenwiser] 01/9/2005 16:24

someone i know who is a jeweller and antiques dealer knew a seller , jeweller reckons sovereigns better investment and he is going to check them for me
£57.00 apeice no premium

[chipperfrd] 01/9/2005 16:16

Bud & goml,

Well, you are $10/oz richer already :) so pretty good timing.

I bought into GBS (gold ETF) a while back as I thought I could use it like a cash holding store for share purchases. It is a bit odd because the quote is in $US but the portfolio value is in GBP and varies with the exchange rate.

It does make things easy if you want to own physical without actually holding the metal.

Bud, if you don't mind me asking: where did you get the sovereigns? and why not Kruggerands? as I have been quoted a better premium to spot on the Kruggers.

[goml] 01/9/2005 16:06

bud you're not the only one, i researched the new breed of gold based money website-banks the other week and opened a GoldMoney account. so i hold some physical gold now too.